Access the full text.
Sign up today, get DeepDyve free for 14 days.
D. Cutler, L. Summers (1987)
The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil LitigationCorporate Finance: Governance
E. Altman (1984)
A Further Empirical Investigation of the Bankruptcy Cost QuestionJournal of Finance, 39
E. Fama, K. French (1992)
The Cross‐Section of Expected Stock ReturnsJournal of Finance, 47
M. Poitevin (1989)
Financial Signalling and the "Deep Pocket" Argument
P. Bolton, D. Scharfstein (1990)
A theory of predation based on agency problems in financial contractingThe American Economic Review, 80
P. Asquith, Robert Gertner, D. Scharfstein (1991)
Anatomy of Financial Distress: An Examination of Junk-Bond IssuersS&P Global Market Intelligence Research Paper Series
Vojislav Maksimovic, J. Zechner (1991)
Debt, Agency Costs, and Industry EquilibriumJournal of Finance, 46
T. Hoshi, A. Kashyap, D. Scharfstein (1990)
The Role of Banks in Reducing the Costs of Financial Distress in JapanBanking & Insurance
Jensen Jensen (1989)
The eclipse of the public corporationHarvard Business Review, 5
S. Myers (1977)
Determinants of corporate borrowingJournal of Financial Economics, 5
René Stulz (1990)
Managerial discretion and optimal financing policiesJournal of Financial Economics, 26
E. Perotti, K. Spier (1993)
Capital Structure as a Bargaining Tool: The Role of Leverage in Contract RenegotiationThe American Economic Review, 83
Nevins Baxter (1967)
LEVERAGE, RISK OF RUIN AND THE COST OF CAPITAL*Journal of Finance, 22
Steven Sharpe (1993)
Financial Market Imperfections, Firm Leverage, and the Cyclicality of EmploymentThe American Economic Review, 84
S. Titman (1984)
The effect of capital structure on a firm's liquidation decision☆Journal of Financial Economics, 13
Cutler Cutler, Summers Summers (1988)
The costs of conflict resolution and financial distress: Evidence from the Texaco‐Pennzoil litigationRand Journal of Economics, 19
D. Fudenberg, J. Tirole (1986)
A "Signal-Jamming" Theory of PredationThe RAND Journal of Economics, 17
R. Sylla (1992)
The role of banks
Karen Wruck (1990)
Financial distress, reorganization, and organizational efficiencyJournal of Financial Economics, 27
M. Jensen, Richard Ruback (1983)
The market for corporate controlJournal of Financial Economics, 11
Michael Jensen, W. Meckling (1976)
Theory of the Firm
Stuart Gilson, Michael Vetsuypens (1993)
CEO Compensation in Financially Distressed Firms: An Empirical AnalysisJournal of Finance, 48
Vojislav Maksimovic, S. Titman (1991)
Financial Policy and Reputation for Product QualityReview of Financial Studies, 4
E. Ofek (1993)
Capital structure and firm response to poor performance: An empirical analysisJournal of Financial Economics, 34
Larry Lang, Renl Stulz (1992)
Contagion and competitive intra-industry effects of bankruptcy announcementsJournal of Financial Economics, 32
(1984)
Corporate financing and investment decisions when firms have information that investors do not have
Andrei Shleifer, Robert Vishny (1992)
Liquidation Values and Debt Capacity: A Market Equilibrium ApproachJournal of Finance, 47
Richard Ruback, M. Jensen (2002)
The Market for Corporate Control: The Scientific EvidenceCorporate Finance: Governance
S. Titman, R. Wessels (1988)
The Determinants of Capital Structure ChoiceJournal of Finance, 43
Titman Titman, Wessels Wessels (1988)
The determination of capital structure choiceJournal of Finance, 43
Stuart Gilson (1989)
Management turnover and financial distressJournal of Financial Economics, 25
S. Bronars, D. Deere (1991)
The Threat of Unionization, the Use of Debt, and the Preservation of Shareholder WealthQuarterly Journal of Economics, 106
Jensen Jensen, Meckling Meckling (1976)
Theory of the firm: Managerial behavior, agency costs and ownership structureJournal of Financial Economics, 11
Carliss Baldwin, S. Mason (1983)
The Resolution of Claims in Financial Distress the Case of Massey FergusonJournal of Finance, 38
Altman Altman (1984)
A further investigation of the bankruptcy cost questionJournal of Finance, 39
S. Dasgupta, Kunal Sengupta (1993)
Sunk investment, bargaining, and choice of capital structureInternational Economic Review, 34
Hoshi Hoshi, Kashyap Kashyap, Scharfstein Scharfstein (1990)
The role of banks in reducing the costs of financial distress in JapanJournal of Financial Economics, 27
T. Opler, S. Titman (1993)
The determinants of leveraged buyout activity : Free cash flow vs. financial distress costsJournal of Finance, 48
J. Stiglitz (1972)
Some Aspects of the Pure Theory of Corporate Finance: Bankruptcies and Take-Overs: ReplyThe Bell Journal of Economics, 6
Lang Lang, Stulz Stulz (1992)
Contagion and intra‐industry effects of bankruptcy announcements: An empirical analysisJournal of Financial Economics, 32
Vojislav Maksimovic, S. Titman (1989)
Financial Policy and a Firm's Reputation for Product QualityThe Finance
S. Ross (1977)
The determination of financial structure: the incentive-signalling approachThe Bell Journal of Economics, 8
This study finds that highly leveraged firms lose substantial market share to their more conservatively financed competitors in industry downturns. Specifically, firms in the top leverage decile in industries that experience output contractions see their sales decline by 26 percent more than do firms in the bottom leverage decile. A similar decline takes place in the market value of equity. These findings are consistent with the view that the indirect costs of financial distress are significant and positive. Consistent with the theory that firms with specialized products are especially vulnerable to financial distress, we find that highly leveraged firms that engage in research and development suffer the most in economically distressed periods. We also find that the adverse consequences of leverage are more pronounced in concentrated industries.
The Journal of Finance – Wiley
Published: Jul 1, 1994
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.